How Tinubu Government Borrowed Over N3.8trillion From Nigerian Central Bank In Six Months
In the latter half of 2023, the administration led by President Bola Tinubu reportedly obtained over N3.8 trillion in fresh borrowings from the Central Bank of Nigeria (CBN), as per provisional data disclosed in the CBN’s latest statistics bulletin for the fourth quarter. This borrowing, akin to Ways and Means financing, contradicted earlier assertions by the Minister of Finance, Wale Edun, who claimed that the Tinubu government had not resorted to CBN borrowing.
A closer look at the data indicates a steady increase in balances, starting from N4.36 trillion in June 2023, possibly due to previous month balances being transferred to the Debt Management Office. Subsequently, the balances escalated, reaching N5.1 trillion in August and surging to N6.4 trillion by September, marking a substantial monthly increase of about N1.3 trillion. This trend continued, with balances reaching N7.2 trillion in October and slightly rising to N7.6 trillion in November before culminating at N8.21 trillion by December, indicating an 88% increase in six months.
The surge in borrowing through Ways and Means financing raises concerns about the government’s fiscal management and its impact on the economy. Such substantial borrowing could lead to inflationary pressures and currency depreciation, ultimately affecting the purchasing power of citizens and overall economic stability.
Moreover, conflicting statements from government officials regarding the utilization of CBN borrowings highlight the need for transparency and accountability in financial governance. Clarity regarding the government’s borrowing activities is crucial for fostering public trust and ensuring responsible fiscal policies.
The significant reliance on Ways and Means financing underscores the urgency for the government to explore alternative revenue sources and implement prudent fiscal measures to reduce reliance on central bank borrowings. Diversifying revenue streams, enhancing tax collection mechanisms, and implementing measures to curb wasteful spending are essential steps toward achieving fiscal sustainability and mitigating the risks associated with excessive borrowing.
Furthermore, robust oversight mechanisms and enhanced transparency in government financial operations are imperative to prevent abuse and mismanagement of public funds. Strengthening institutional frameworks and promoting accountability will help foster economic stability, promote investor confidence, and facilitate sustainable development.
In conclusion, the revelation of substantial borrowings through Ways and Means financing underscores the need for proactive measures to address fiscal challenges and promote responsible financial management. Transparency, accountability, and prudent fiscal policies are essential for safeguarding the economy and ensuring sustainable development in Nigeria.
